Asi Sharabi, the founder of Wonderbly children’s books, at his office in east london.
Photograph: Katherine Anne Rose for the Observer

At a mentoring session for founders of early-stage startups last year, Asi Sharabi broached a topic rarely discussed – at least frankly and in public – by the tech community: the daunting personal and psychological challenges faced by (often very young) entrepreneurs.

“The biggest challenge on a day-to-day basis is what I call managing your own psychology: the pressure, the anxiety and all the faces you have to put on,” he told a roomful of founders selected to be part of Tech Nation’s growth programme. “I realised there are a lot of balancing acts to being a founder, especially when we decided to play the venture [capital]-backed game.”

Sharabi is co-founder and chief executive of Wonderbly, which publishes personalised books for children and has raised £17.4m from investors including Google Ventures and German toy and puzzle-maker Ravensburger. He sees the main balancing act as “killing it versus shitting it”. The startup world is awash with testosterone and bravado, and everyone’s expected to “kill it” all the time, the softly spoken entrepreneur explained. “Very rarely do you read about how flawed founders can be.

“As a first-time founder, I feel like I woke up one morning to find I have a board [of directors], investors and 80 people to manage – and I don’t have a fucking clue how to do it.” He was smiling but, across the hushed room, there were murmurs of recognition.

The lure of building the next Facebook, WhatsApp, Uber or Airbnb has led to an unprecedented wave of startups in the UK, which is Europe’s “unicorn factory”, accounting for 13 (or 38%) of the continent’s 34 startups valued at $1bn or more, according to data from dealroom.co.

UK-based startups also attract the lion’s share of venture capital (VC) investment, which is crucial for fuelling the sort of growth such businesses need. At nearly £7bn in 2017, VC investment in UK companies exceeded that of Germany, France and Sweden combined.

However, taking on growth capital comes at a heavy price for many founders who can find themselves under severe pressure to work around the clock. Reliable data is thin on the ground, but according to one 2015 US study of 242 entrepreneurs (and 93 demographically matched comparison participants), 72% reported mental health concerns, significantly higher than in the comparison group. The entrepreneurs were also “significantly more likely to report a lifetime history of depression (30%), ADHD (29%), substance use conditions (12%) and bipolar diagnosis (11%)”.

Silicon Roundabout in Old Street is the London hub for technology startups. Photograph: Bloomberg/Getty Images

Founding a startup “is a very lonely place to find yourself in”, says Yifhat Arnstein, an executive coach who works with management teams at such tech giants as Facebook, Deliveroo and Farfetch, alongside new founders. “Nobody believes that facade of ‘everything’s great’, and it’s a lot of extra weight on your shoulders. What I find when I come into these businesses is they’re hungry to talk to someone neutral. As soon as I close the door, it all comes out.”

Whether people with mental health issues are more likely to be attracted to the white-knuckle ride of entrepreneurship – or that the particular stresses and strains of the tech industry serve as a catalyst – is moot (and unknown), but there’s little doubt that, for VC-backed founders in particular, it can be all but impossible to switch off.

A week after his taboo-busting presentation, Sharabi, in an interview for Upscale, a new book on how to grow a tech company, elaborates: “When there’s investment and big promises involved, there’s a lot more at stake. [Scaling a startup] becomes such an all-encompassing experience that you can’t afford not to be ‘all in’.” The result is that your startup “never leaves your head – there’s not a single waking hour when this thing is not part of your being. And there’s no one you can talk to about it.”

Asked if he thinks some founders are almost complicit in not discussing this aspect of entrepreneurship, for fear of perhaps sounding weak, Sharabi, who is 44 and almost too tall for the cramped meeting room in Wonderbly’s Hackney warehouse base, is unequivocal. “I have no doubt ... you’re living in a testosterone-led industry, where it’s all about ‘the gospel of growth’. And, mostly, you only hear the good stories.”

James Routledge was one of the first founders to go against the grain. Launching his first startup at 20, while still at university, having raised £767,000 in angel and VC investment, he began to suffer from anxiety, panic attacks and sleepless nights. The business failed. “My heart was constantly dancing or fluttering,” he recalls.

Routledge, who went on to found mental wellbeing startup Sanctus, blew the whistle on the stigma surrounding poor mental health in UK tech when he wrote a widely shared blog in 2016. He now argues that it’s time for founders to stop worrying about looking weak before peers or investors. “It’s your choice, whether you conform to that [macho culture] or not,” he says. “[No one forces you] to put on a front and say you are always smashing it. You can tell your investors honestly how it’s going … I’m not saying it’s easy to do by the way, I’m just saying it can be done.”

He is far from alone in thinking that greater openness can pay off. Cherry Freeman, who co-founded LoveCrafts, a social network and e-commerce site for home-crafters which has raised more than $60m (£46m), says investors increasingly want to work with open, collaborative and emotionally intelligent founders, not least because those entrepreneurs tend to make better leaders and are able to inspire their teams.

“Those qualities come only with a high degree of self-awareness and transparency about our strengths and our failings,” she says. “The ability to overcome adversity is such an important part of being a successful founder.”

As founders have begun to speak out, there are signs attitudes are shifting among investors too. In Silicon Valley last month, Felicis Ventures – backers of companies such as Fitbit, Shopify, Adyen and Dollar Shave Club – announced it would commit 1% in capital, on top of every first cheque it writes to a startup, to be used towards “personalised founder development”, including “executive coaching, therapy, leadership development and more”.

Perceptions are changing here, too, says investor Rory Stirling, formerly of BGF Ventures. He says it’s a mistake for entrepreneurs to think they should avoid showing weakness. “As an investor, I’m looking for founders with unusual or extreme strengths in certain areas, not those with a lack of weakness. A lack of weakness implies ‘a good all-rounder’ – and in my experience these are not the people who change the world.

“Building a company isn’t a physical struggle (although it can be physically exhausting) – it’s primarily a mental struggle, and an entrepreneur’s mental stamina is going to be tested, often to the extreme,” he continues. “We need to acknowledge this and as an industry, generally, we need to be better at providing the tools and resources to help entrepreneurs build their mental fitness.”

It’s too soon to say whether a few enlightened outliers represent a sea change across an industry with a short attention span, which by definition is always on the lookout for the first signs of the next big thing. However, there’s increasing evidence that the issue of mental health is finally being taken seriously and no longer confined to whispered conversations with trusted confidantes.

“The industry still has a long way to go in remembering that we’re all human,” says Tazz Gault co-founder and director at StateZero Labs, a blockchain accelerator. “Investors have a responsibility for the wellbeing of the founders they invest in. After all, a healthy founder, both physically and mentally, inevitably leads to a much healthier and long-lasting business.”